unit 3 P2
Introduction
In this assignment I will inform about two main ways of managing business finance is to use break even and cash flow forecasting I will include advantages and disadvantages.
Cash flow forecasting
Is outflows and inflows putted together; usually outflows and inflows are crated in Microsoft Excel. In Microsoft Excel really easy to calculates inflows and outflows because of a formulas that do all the maths for example “=B1+B16” this formula will add box number (B1) and (B16) together, even if number in box (B1) will changed the answer will change as well. The whole system counting money that are entering the business and coming out is called “Cash Flow.”
Cash flow forecasting is used for forecasting businesses finances or in other words the businesses balance in a bank account. Cash flow forecasting is good for business because that way owner can see if their company/organization is getting profit or making loss. Forecasting means predicting something cash flow forecasting is not only looking at the money that your business has and spent it also allows you to see what money your business will get next month. However, there is some disadvantages thing such as cash flow is really hard to create because businesses have irregular inflows and outflows. The creator of cash flow should keep in mind about PEST analysis because if cash flow was created and next month’s law changes that effects your product then another cash flow should be created that will be up to date same with environment and technologic. In example if a machine will be created that can do work of three men and your owner bout one of them, employees will get fired and regular outflows will change.
Break even analysis
Break even analysis are used to determine how much sales volume your business needs to start making a profit. Break even analysis usually created to make graph in order to create one you need to know formula which is “Fixed Costs divided by (Revenue per unit - Variable costs
In this assignment I will inform about two main ways of managing business finance is to use break even and cash flow forecasting I will include advantages and disadvantages.
Cash flow forecasting
Is outflows and inflows putted together; usually outflows and inflows are crated in Microsoft Excel. In Microsoft Excel really easy to calculates inflows and outflows because of a formulas that do all the maths for example “=B1+B16” this formula will add box number (B1) and (B16) together, even if number in box (B1) will changed the answer will change as well. The whole system counting money that are entering the business and coming out is called “Cash Flow.”
Cash flow forecasting is used for forecasting businesses finances or in other words the businesses balance in a bank account. Cash flow forecasting is good for business because that way owner can see if their company/organization is getting profit or making loss. Forecasting means predicting something cash flow forecasting is not only looking at the money that your business has and spent it also allows you to see what money your business will get next month. However, there is some disadvantages thing such as cash flow is really hard to create because businesses have irregular inflows and outflows. The creator of cash flow should keep in mind about PEST analysis because if cash flow was created and next month’s law changes that effects your product then another cash flow should be created that will be up to date same with environment and technologic. In example if a machine will be created that can do work of three men and your owner bout one of them, employees will get fired and regular outflows will change.
Break even analysis
Break even analysis are used to determine how much sales volume your business needs to start making a profit. Break even analysis usually created to make graph in order to create one you need to know formula which is “Fixed Costs divided by (Revenue per unit - Variable costs